BILL NUMBER: SB 1302	CHAPTERED  10/10/99

	CHAPTER   865
	FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999
	APPROVED BY GOVERNOR   OCTOBER 8, 1999
	PASSED THE SENATE   SEPTEMBER 10, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 8, 1999
	AMENDED IN ASSEMBLY   SEPTEMBER 3, 1999
	AMENDED IN ASSEMBLY   JUNE 30, 1999
	AMENDED IN ASSEMBLY   JUNE 1, 1999
	AMENDED IN SENATE   APRIL 12, 1999

INTRODUCED BY   Committee on Revenue and Taxation (Senators Chesbro
(Chair), Alpert, Burton, McPherson, and Poochigian)

                        MARCH 3, 1999

   An act to amend Sections 6203, 6452, 6454, 6479.3, 6480.1, 6480.6,
6480.16, 6592, 7273, 7354, and 8101 of, and to add Sections 6479.31,
8106.7, and 8127.6 to, the Revenue and Taxation Code, relating to
taxation.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1302, Committee on Revenue and Taxation.  Sales and use taxes:
fuel taxes.
   The Sales and Use Tax Law requires the filing of sales and use tax
returns by sellers and other persons, as specified.
   This bill would authorize the board to accept the electronic
filing of those returns, and would clarify that the maximum penalty
with respect to certain electronic funds transfers shall be limited
to 6%.
   The Sales and Use Tax Law defines a retailer engaged in business
in this state to include certain retailers soliciting orders for
property by means of telecommunication or television shopping systems
and certain retailers having a franchisee operating under its trade
name if the franchisee is required to collect the tax.
   This bill would eliminate those retailers from that definition.
   The Sales and Use Tax Law limits the amount the board may charge
for administering a local special taxing jurisdiction's transactions
and use taxes and to submit a report to the Legislature in connection
thereof.
   This bill would correct technical errors in those provisions and
extend the time to submit that report.
   The Sales and Use Tax Law provides that the sales tax prepayment
rate for jet and diesel fuel shall be determined based on the sales
tax prepayment rate calculated for gasoline, less 11/2
per gallon.      This bill would authorize an independent
computation of the jet and diesel fuel sales tax prepayment rates.
   The Motor Vehicle Fuel License Tax Law provides, among other
things, specified exemptions from the license taxes imposed, and
specified procedures regarding overpayments and refunds.
   This bill would provide that a distributor who is licensed under
the Motor Vehicle Fuel License Tax Law and is authorized by the board
to acquire exempt motor vehicle fuel from a distributor who has
furnished the requisite security, and who paid tax reimbursement to a
distributor who is not authorized by the board to acquire exempt
motor vehicle fuel pursuant to those security provisions, may not
seek tax reimbursement from another distributor who is authorized by
the board to acquire exempt motor vehicle fuel pursuant to the
security provisions, but would permit the distributor to seek a
refund, pursuant to a specified provision, of the tax reimbursement
it paid to the distributor who is not authorized by the board to
acquire exempt motor vehicle fuel.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 6203 of the Revenue and Taxation Code is
amended to read:
   6203.  (a) Except as provided by Sections 6292 and 6293, every
retailer engaged in business in this state and making sales of
tangible personal property for storage, use, or other consumption in
this state, not exempted under Chapter 3.5 (commencing with Section
6271) or Chapter 4 (commencing with Section 6351), shall, at the time
of making the sales or, if the storage, use, or other consumption of
the tangible personal property is not then taxable hereunder, at the
time the storage, use, or other consumption becomes taxable, collect
the tax from the purchaser and give to the purchaser a receipt
therefor in the manner and form prescribed by the board.
   (b) As respects leases constituting sales of tangible personal
property, the tax shall be collected from the lessee at the time
amounts are paid by the lessee under the lease.
   (c) "Retailer engaged in business in this state" as used in this
section and Section 6202 means and includes any of the following:
   (1) Any retailer maintaining, occupying, or using, permanently or
temporarily, directly or indirectly, or through a subsidiary, or
agent, by whatever name called, an office, place of distribution,
sales or sample room or place, warehouse or storage place, or other
place of business.
   (2) Any retailer having any representative, agent, salesperson,
canvasser, independent contractor, or solicitor operating in this
state under the authority of the retailer or its subsidiary for the
purpose of selling, delivering, installing, assembling, or the taking
of orders for any tangible personal property.
   (3) As respects a lease, any retailer deriving rentals from a
lease of tangible personal property situated in this state.
   (4) (A) Any retailer soliciting orders for tangible personal
property by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities occurring in
this state or benefits from the location in this state of authorized
installation, servicing, or repair facilities.
   (B) This paragraph shall become operative upon the enactment of
any congressional act that authorizes states to compel the collection
of state sales and use taxes by out-of-state retailers.
   (5) Notwithstanding Section 7262, a retailer specified in
paragraph (4) above, and not specified in paragraph (1), (2), or (3)
above, is a "retailer engaged in business in this state" for the
purposes of this part and Part 1.5 (commencing with Section 7200)
only.
   (d) (1) For purposes of this section, "engaged in business in this
state" does not include the taking of orders from customers in this
state through a computer telecommunications network located in this
state which is not directly or indirectly owned by the retailer when
the orders result from the electronic display of products on that
same network.  The exclusion provided by this subdivision shall apply
only to a computer telecommunications network that consists
substantially of online communications services other than the
displaying and taking of orders for products.
   (2) This subdivision shall become inoperative upon the operative
date of provisions of a congressional act that authorize states to
compel the collection of state sales and use taxes by out-of-state
retailers.
   (e) Except as provided in this subdivision, a retailer is not a
"retailer engaged in business in this state" under paragraph (2) of
subdivision (c) if that retailer's sole physical presence in this
state is to engage in convention and trade show activities as
described in Section 513(d)(3)(A) of the Internal Revenue Code, and
if the retailer, including any of his or her representatives, agents,
salespersons, canvassers, independent contractors, or solicitors,
does not engage in those convention and trade show activities for
more than seven days, in whole or in part, in this state during any
12-month period and did not derive more than ten thousand dollars
($10,000) of gross income from those activities in this state during
the prior calendar year.  Notwithstanding the preceding sentence, a
retailer engaging in convention and trade show activities, as
described in Section 513(d)(3)(A) of the Internal Revenue Code, is a
"retailer engaged in business in this state," and is liable for
collection of the applicable use tax, with respect to any sale of
tangible personal property occurring at the convention and trade show
activities and with respect to any sale of tangible personal
property made pursuant to an order taken at or during those
convention and trade show activities.
   (f) The Legislature finds and declares that the deletion of
language by the act adding this subdivision that was contained in
paragraphs (5) and (8) of subdivision (c) is intended to codify the
holdings of recent court cases.
  SEC. 1.5.  Section 6452 of the Revenue and Taxation Code is amended
to read:
   6452.  (a) On or before the last day of the month following each
quarterly period of three months, a return for the preceding
quarterly period shall be filed with the board in the form as
prescribed by the board, which may include, but not be limited to,
electronic media.
   (b) (1) For purposes of the sales tax, a return shall be filed by
every seller and also by every person who is liable for the sales tax
under this part.  For purposes of the use tax, a return shall be
filed by every retailer engaged in business in this state and by
every person purchasing tangible personal property, the storage, use,
or other consumption of which is subject to the use tax, who has not
paid the use tax due to a retailer required to collect the tax.
Returns shall be signed by the person required to file the return or
by his or her duly authorized agent but need not be verified by oath.
  If a return is prepared by a paid preparer, that preparer shall
enter his or her name, social security number or federal employee
identification number, and business name and address in the space
provided on the return.  Any paid preparer who fails to provide the
information specified by the preceding sentence shall be subject to a
fifty dollar ($50) fine for each failure to provide that
information.
   (2) For purposes of paragraph (1), "paid preparer" means any
person who for compensation prepares, or employs one or more persons
to prepare, any sales and use tax return required to be filed under
this part.  For purposes of this paragraph, the preparation of a
substantial portion of any sales and use tax return required to be
filed under this part shall be considered the equivalent of preparing
that return in its entirety.  A person is not a "paid preparer" as
defined in this paragraph solely by reason of doing any of the
following:
   (A) Furnishing typing, reproduction, or other mechanical
assistance.
   (B) Preparing in a fiduciary capacity a return for any other
person.
   (c) Any retailer or other person who fails or refuses to furnish
any return required to be made, or who fails or refuses to furnish a
supplemental return or other data required by the board, is guilty of
a misdemeanor punishable as provided in Section 7153.
  SEC. 2.  Section 6454 of the Revenue and Taxation Code is amended
to read:
   6454.  Except as provided in Sections 6479.3 and 6479.31, a person
required to file the return shall deliver the return together with a
remittance of the amount of the tax due to the office of the board.

  SEC. 3.  Section 6479.3 of the Revenue and Taxation Code is amended
to read:
   6479.3.  (a) Any person whose estimated tax liability under this
part averages twenty thousand dollars ($20,000) or more per month, as
determined by the board pursuant to methods of calculation
prescribed by the board, shall remit amounts due by an electronic
funds transfer under procedures prescribed by the board.  Any person
who collects use tax on a voluntary basis is not required to remit
amounts due by electronic funds transfer.
   (b) Any person whose estimated tax liability under this part
averages less than twenty thousand dollars ($20,000) per month or any
person who voluntarily collects use tax may elect to remit amounts
due by electronic funds transfer with the approval of the board.  The
election shall be operative for a minimum of one year.
   (c) Any person remitting amounts due pursuant to subdivision (a)
or (b) shall perform electronic funds transfer in compliance with the
due dates set forth in Article 1 (commencing with Section 6451) and
Article 1.1 (commencing with Section 6470).  Payment is deemed
complete on the date the electronic funds transfer is initiated, if
settlement to the state's demand account occurs on or before the
banking day following the date the transfer is initiated.  If
settlement to the state's demand account does not occur on or before
the banking day following the date the transfer is initiated, payment
is deemed to occur on the date settlement occurs.
   (d) Any person remitting taxes by electronic funds transfer shall,
on or before the due date of the remittance, file a return for the
preceding reporting period in the form and manner prescribed by the
board.  Any person who fails to timely file the required return shall
pay a penalty of 10 percent of the amount of taxes, exclusive of
prepayments, with respect to the period for which the return is
required.
   (e) (1) Except as provided in paragraph (2), any person required
to remit taxes pursuant to this article who remits those taxes by
means other than appropriate electronic funds transfer shall pay a
penalty of 10 percent of the taxes incorrectly remitted.
   (2) A person required to remit prepayments pursuant to this
article who remits a prepayment by means other than an appropriate
electronic funds transfer shall pay a penalty of 6 percent of the
prepayment amount incorrectly remitted.
   (f) Except as provided in Sections 6476 and 6477, any person who
fails to pay any tax to the state or any amount of tax required to be
collected and paid to the state, except amounts of determinations
made by the board under Article 2 (commencing with Section 6481) or
Article 3 (commencing with Section 6511), within the time required
shall pay a penalty of 10 percent of the tax or amount of tax, in
addition to the tax or amount of tax, plus interest at the modified
adjusted rate per month, or fraction thereof, established pursuant to
Section 6591.5, from the date on which the tax or the amount of tax
required to be collected became due and payable to the state until
the date of payment.
   (g) In determining whether a person's estimated tax liability
averages twenty thousand dollars ($20,000) or more per month, the
board may consider tax returns filed pursuant to this part and any
other information in the board's possession.
   (h) Except as provided in subdivision (i), the penalties imposed
by subdivisions (d), (e), and (f) shall be limited to a maximum of 10
percent of the taxes due, exclusive of prepayments, for any one
return.  Any person remitting taxes by electronic funds transfer
shall be subject to the penalties under this section and not Section
6591.
   (i) The penalties imposed with respect to paragraph (2) of
subdivision (e) and Sections 6476 and 6477 shall be limited to a
maximum of 6 percent of the prepayment amount.
   (j) The board shall promulgate regulations pursuant to Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2
of the Government Code for purposes of implementing this section.
  SEC. 3.5.  Section 6479.31 is added to the Revenue and Taxation
Code, to read:
   6479.31.  (a) Any return, declaration, statement, or other
document required to be made under this part that is filed using
electronic media shall be in a form as the board may prescribe and is
not complete, and therefore not filed, unless an electronic filing
declaration is signed by the taxpayer.  The board may prescribe forms
and instructions for requiring the electronic filing declaration to
be retained by the preparer or taxpayer and may require the
declaration to be furnished to the board upon request.
   (b) Notwithstanding any other law, any return, declaration,
statement, or other document otherwise required to be signed that is
filed by the taxpayer using electronic media in a form as required by
the board shall be deemed to be a signed, valid original document,
including upon reproduction to paper form by the board.
   (c) Electronic media includes, but is not limited to, computer
modem, magnetic media, optical disk, facsimile machine, or telephone.

   (d) Unless remittance is made pursuant to Section 6479.3, a person
filing any return under this section shall deliver remittance of the
amount of the tax due to the office of the board, along with a
voucher in a form prescribed by the board, on or before the date the
return is required to be filed.
  SEC. 4.  Section 6480.1 of the Revenue and Taxation Code is amended
to read:
   6480.1.  (a) After service of written notification by the board,
on any distribution in this state of motor vehicle fuel subject to
the motor vehicle fuel license tax, the distributor shall collect
prepayment of retail sales tax from the person to whom the motor
vehicle fuel is distributed.  The prepayment required to be collected
by the distributor constitutes a debt owed by the distributor to
this state until paid to the board, until satisfactory proof has been
submitted to prove that the retailer of the fuel has paid the retail
sales tax to the board, or until a distributor or broker who has
consumed the fuel has paid the use tax to the board.  Each
distributor shall report and pay the prepayment amounts to the board,
on a form prescribed by the board, in the period in which the fuel
is distributed.  On each subsequent distribution of that motor
vehicle fuel, each seller, other than the retailer, shall collect
from his or her purchaser a prepayment computed using the rate
applicable at the time of distribution.  Each distributor shall
provide his or her purchaser with a receipt or invoice for the
collection of the prepayment amounts which shall be separately stated
thereon.
   (b) After service of written notification by the board, the broker
shall collect prepayment of the retail sales tax from the person to
whom the motor vehicle fuel is transferred.  The prepayment required
to be collected by the broker constitutes a debt owed by the broker
to the state until paid to the board, or until satisfactory proof has
been submitted to prove that the retailer of the fuel has paid the
tax to the board.  Each broker shall provide his or her purchaser
with a receipt or invoice for the collection of the prepayment
amounts which shall be separately stated thereon.
   Each broker shall report and pay the prepayment amounts to the
board, on a form prescribed by the board, in the period in which the
fuel is distributed.  The amount of prepayment paid by the broker to
his or her vendor shall constitute a credit against the amount of
prepayment required to be collected and remitted by the broker to the
board.
   (c) A distributor or broker who pays the prepayment and issues a
resale certificate to the seller, but subsequently consumes the fuel,
shall be entitled to a credit against his or her sales and use taxes
due and payable for the period in which the prepayment was made,
provided that he or she reports and pays the use tax to the board on
the consumption of that fuel.
   (d) The amount of a prepayment paid by the retailer or a
distributor or broker who has consumed the fuel to the seller from
whom he or she acquired the fuel shall constitute a credit against
his or her sales and use taxes due and payable for the period in
which the distribution was made.  Failure of the distributor or
broker to report prepayments or the distributor's or broker's failure
to comply with any other duty under this article shall not
constitute grounds for denial of the credit to the retailer,
distributor, or broker, either on a temporary or permanent basis or
otherwise.  The retailer, distributor, or broker shall be entitled to
the credit to the extent of the amount prepaid to his or her
supplier as evidenced by purchase documents, invoices, or receipts
stating separately the amount of tax prepayment.
   (e) The rate of the prepayment required to be collected during the
period from July 1, 1986, through March 31, 1987, shall be four
cents ($0.04) per gallon of motor vehicle fuel distributed or
transferred.
   (f) On April 1 of each succeeding year, the rate per gallon,
rounded to the nearest one-half of one cent, of the required
prepayment shall be established by the board based upon 80 percent of
the combined state and local sales tax rate established by Sections
6051, 6051.2, 6051.3, and 7202, and Section 35 of Article XIII of the
California Constitution on the arithmetic average selling price
(excluding sales tax) as determined by the State Energy Resources
Conservation and Development Commission, in its latest publication of
the "Quarterly Oil Report," of all grades of gasoline sold through a
self-service gasoline station.  In the event the "Quarterly Oil
Report" is delayed or discontinued, the board may base its
determination on other sources of the arithmetic average selling
price of gasoline.  The board shall make its determination of the
rate no later than November 1 of the year prior to the effective date
of the new rate.  Immediately upon making its determination and
setting of the rate, the board shall each year, no later than January
1, notify by mail every distributor, broker, and retailer of motor
vehicle fuel.  In the event the price of fuel decreases or increases,
and the established rate results in prepayments which consistently
exceed or are significantly lower than the retailers' sales tax
liability, the board may readjust the rate.
  SEC. 4.2.  Section 6480.6 of the Revenue and Taxation Code is
amended to read:
   6480.6.  (a) The following persons who have paid prepayment
amounts either directly to the board or to the person from whom it
was purchased, on the distribution of motor vehicle fuel which was
subject to the motor vehicle fuel license tax, shall be refunded
those amounts:
   (1) Any person who exports the motor vehicle fuel for subsequent
sale outside this state.
   (2) Any person who sells the motor vehicle fuel which is exempt
from the sales or use tax pursuant to Sections 6352, 6357, 6381, and
6396.
   (3) Any person who has lost the motor vehicle fuel through fire,
flood, theft, leakage, evaporation, shrinkage, spillage, or accident,
prior to any retail sale.
   (4) Any person who is unable to collect the prepayment from the
purchaser insofar as the sales of the fuel are represented by
accounts which have been found to be worthless and charged off for
income tax purposes.  If partial payments have been made, the
payments shall be prorated between amounts due for fuel and amounts
due for the related prepayment.  If any of those accounts are
thereafter in whole or in part collected by the seller, the gallons
of fuel represented by the amounts collected shall be included in the
first return filed after that collection and the amount of the
prepayment thereon paid with the return.  As a condition for
eligibility for refund, the board may require the seller to submit
periodical reports listing accounts delinquent for a 90-day period or
over.
   (5) Any person who is licensed under Section 7451 and is
authorized by the board to acquire exempt motor vehicle fuel pursuant
to paragraph (3) of subdivision (a) of Section 7401, who purchases
the motor vehicle fuel from a person who is not authorized by the
board to acquire exempt motor vehicle fuel pursuant to paragraph (3)
of subdivision (a) of Section 7401.
   (b) In lieu of a refund, the board may authorize a credit to be
taken by the person to whom the refund is due upon his or her
prepayment form or sales and use tax return.
  SEC. 4.4.  Section 6480.16 of the Revenue and Taxation Code is
amended to read:
   6480.16.  (a) After service of written notification by the board,
the producer or importer shall collect prepayment of retail sales tax
from the person to whom fuel is first sold in this state.  The
prepayment required to be collected by the producer or importer
constitutes a debt owed by the producer or importer to the state
until paid to the board, until satisfactory proof has been submitted
to prove that the retailer of the fuel has paid the retail sales tax
to the board, or until a producer or importer who has consumed the
fuel has paid the use tax to the board.  Each producer or importer
shall report and pay the prepayment amounts to the board on a form
prescribed by the board in the period in which the fuel is sold.  On
each subsequent sale of that fuel, each seller, other than the
retailer, shall collect from his or her purchaser a prepayment
computed using the rate applicable at the time of sale.  Each seller
shall provide his or her purchaser with a receipt or invoice for the
collection of the prepayment amounts that shall be separately stated
thereon.
   (b) After service of written notification by the board, the jobber
shall collect prepayment of the retail sales tax from the person to
whom the fuel is sold.  The prepayment required to be collected by
the jobber constitutes a debt owed by the jobber to the state until
paid to the board, or until satisfactory proof has been submitted to
prove that the retailer of the fuel has paid the tax to the board.
Each jobber shall provide his or her purchaser with a receipt or
invoice for the collection of the prepayment amounts, and the amounts
shall be separately stated thereon.
   Each jobber shall report and pay the prepayment amounts to the
board, on a form prescribed by the board, in the period in which the
fuel is sold.  The amount of prepayment paid by the jobber to his or
her vendor shall constitute a credit against the amount of prepayment
required to be collected and remitted by the jobber to the board.
   (c) A producer, importer, or jobber who pays the prepayment and
issues a resale certificate to the seller, but subsequently consumes
the fuel, shall be entitled to a credit against his or her sales and
use taxes due and payable for the period in which the prepayment was
made, provided that he or she reports and pays the use tax to the
board on the consumption of that fuel.
   (d) The amount of a prepayment paid by the retailer or a producer,
importer, or jobber who has consumed the fuel, to the seller from
whom he or she acquired the fuel shall constitute a credit against
his or her sales and use taxes due and payable for the period in
which the sales were made.  Failure of the producer, importer, or
jobber to report prepayments or the producer's, importer's, or jobber'
s failure to comply with any other duty under this article shall not
constitute grounds for denial of the credit to the retailer,
producer, importer, or jobber, either on a temporary or permanent
basis or otherwise.  The retailer, producer, importer, or jobber
shall be entitled to the credit to the extent of the amount prepaid
to his or her supplier as evidenced by purchase documents, invoices,
or receipts stating separately the amount of tax prepayment.
   (e) On April 1 of each succeeding year, the prepayment rate per
gallon for aircraft jet fuel rounded to the nearest one-half of one
cent ($0.005), shall be established by the board based upon 80
percent of the combined state and local sales tax rate established by
Sections 6051, 6051.2, 6051.3, and 7202, and Section 35 of Article
XIII of the California Constitution on the arithmetic average selling
price (excluding sales and state excise tax) as determined by the
board.  The board shall make its determination of the rate no later
than November 1 of the year prior to the effective date of the new
rate.  The rate of the prepayment required to be collected for
aircraft jet fuel shall be equal to 80 percent of the arithmetic
average selling price of jet fuel as specified by industry
publications.  Immediately upon making its determination and setting
of the rate, the board shall each year, no later than January 1,
notify by mail every producer, importer, jobber, and retailer of
fuel.  In the event the price of fuel decreases or increases, and the
established rate results in prepayments that consistently exceed
established rate results or are significantly lower than the
retailers' sales tax liability, the board may readjust the rate.
   (f) On April 1 of each succeeding year, the prepayment rate per
gallon for diesel fuel rounded to the nearest one-half of one cent
($0.005), shall be established by the board based upon 80 percent of
the combined state and local sales tax rate established by Sections
6051, 6051.2, 6051.3, and 7202, and Section 35 of Article XIII of the
California Constitution on the arithmetic average selling price
(excluding sales and state excise tax) as determined by the board.
The board shall make its determination of the rate no later than
November 1 of the year prior to the effective date of the new rate.
The rate of the prepayment required to be collected for diesel fuel
and other qualifying fuels shall be equal to 80 percent of the
arithmetic average selling price of diesel fuel as specified by
industry publications.  Immediately upon making its determination and
setting of the rate, the board shall each year, no later than
January 1, notify by mail every producer, importer, jobber, and
retailer of fuel.  In the event the price of fuel decreases or
increases, and the established rate results in prepayments that
consistently exceed established rate results or are significantly
lower than the retailers' sales tax liability, the board may readjust
the rate.  Notwithstanding any other provision of this section,
sales or exchanges of fuel between those persons exempt from license
taxes pursuant to paragraph (3) of subdivision (a) of Section 7401
shall be exempt from prepayment of sales tax.
  SEC. 5.  Section 6592 of the Revenue and Taxation Code is amended
to read:
   6592.  If the board finds that a person's failure to make a timely
return or payment is due to reasonable cause and circumstances
beyond the person's control, and occurred notwithstanding the
exercise of ordinary care and the absence of willful neglect, the
person shall be relieved of the penalties provided by Sections 6476,
6477, 6479.3, 6480.4, 6480.8, 6511, 6565, 6591, and 7051.2.
   Any person seeking to be relieved of the penalty shall file with
the board a statement under penalty of perjury setting forth the
facts upon which he or she bases his or her claim for relief.

       SEC. 6.  Section 7273 of the Revenue and Taxation Code is
amended to read:
   7273.  In addition to the amounts otherwise provided for
preparatory costs, the board shall charge an amount for its services
in administering the transactions and use tax determined by the
board, with the concurrence of the Department of Finance, as follows:

   (a) Beginning with the 1993-94 fiscal year, the amount charged
shall be based on the total special taxing jurisdiction costs
reflected in the annual Budget Act.  This amount comprises the
categories of direct, shared, and central agency costs incurred by
the board and shall include the following:
   (1) The amount charged to each entity shall be based on the
recommendations incorporated in the March 1992, report by the Auditor
General entitled "The Board of Equalization Needs To Adjust Its
Model For Setting Reimbursement Rates For Special Tax Jurisdictions."

   (2) The amount charged may be adjusted in the current fiscal year
to reflect the difference between the board's budgeted costs and any
significant revised estimate of costs.  Any adjustment shall be
subject to budgetary controls included in the Budget Act.  Prior to
any adjustment, the Department of Finance shall notify the
Chairperson of the Joint Legislative Budget Committee not later than
30 days prior to the effective date of the adjustment.
   (3) For the 1995-96 fiscal year and each fiscal year thereafter,
the amount charged shall be adjusted to reflect the difference
between the board's recovered costs and the actual costs incurred by
the board during the fiscal year two years prior.
   (b) The board shall, by June 1 of each year, notify districts of
the amount that it anticipates will be assessed for the next fiscal
year.  The districts shall be notified of the actual amounts that
will be assessed within 30 days after enactment of the Budget Act for
that fiscal year.
   (c) The amount charged a transactions and use tax district that
becomes operative during the fiscal year shall be estimated for that
fiscal year based on that district's proportionate share of direct,
indirect, and shared costs.
   (d) The amounts determined by subdivision (a) shall be deducted in
equal amounts from the quarterly allocation of taxes collected by
the board for a given district.
   (e) For the 1998-99 fiscal year and each fiscal year thereafter,
the amount charged to a district by the board shall not exceed the
lesser of the amount as a percentage of revenue the board would have
charged for the 1998-99 fiscal year, or the first full year of a new
district's operations under this section as it read prior to the
amendments made by the act adding this subdivision, or the following
percentages:
   (1) For districts imposing a transactions and use tax of one-half
of 1 percent or greater, the amount charged by the board shall not
exceed 1.5 percent, for the 1998-99 fiscal year and each fiscal year
thereafter.
   (2) Beginning with the 1998-99 fiscal year and in each fiscal year
thereafter, the amount charged to a district imposing a transactions
and use tax ranging from one-quarter of 1 percent up to but less
than one-half of 1 percent shall not exceed 3 percent.
   (3) Beginning with the 1998-99 fiscal year and in each fiscal year
thereafter, the amount charged to a district imposing a transactions
and use tax below one-quarter of 1 percent shall not exceed 5
percent.
   (f) The board shall report to the Chairperson of the Senate
Committee on Budget and Fiscal Review and the Chairperson of the
Assembly Committee on Budget by March 1, 1999, and January 1, 2000,
on the actions the board will take to adjust its costs commensurate
with the changes in reimbursements effected by this bill.  The report
shall analyze the impact of the reduced reimbursements on the board'
s budget and how the board's actions may impact its revenue-producing
activities.  The board may not reduce positions that are responsible
for the generation or receipt of revenues, including, but not
limited to, positions in the audits and compliance programs.
  SEC. 7.  Section 7354 of the Revenue and Taxation Code is amended
to read:
   7354.  The license tax shall be imposed upon only one distribution
of the same motor vehicle fuel, except where a refund or credit has
been allowed pursuant to subdivision (f) of Section 8101 or Section
8106.7, and except as may otherwise be provided in this part.
   In determining the value of the motor vehicle fuel for any and all
taxes according to value, there shall be excluded from the value the
amount of motor vehicle fuel tax imposed.
  SEC. 8.  Section 8101 of the Revenue and Taxation Code is amended
to read:
   8101.  The following persons who have paid a license tax for motor
vehicle fuel, either directly or to the vendor from whom it was
purchased, or indirectly by the adding of the amount of the tax to
the price of the fuel, shall, except as otherwise provided in this
part, be reimbursed and repaid the amount of the tax:
   (a) Any person who buys and uses the motor vehicle fuel for
purposes other than operating motor vehicles upon the public highways
of the state, except vehicles subject to identification under
Division 16.5 (commencing with Section 38000) of the Vehicle Code,
which are used for recreational purposes or are rented or leased for
recreational purposes, and, on and after July 1, 1974, except motor
vehicles subject to registration under Division 3 (commencing with
Section 4000) of the Vehicle Code while engaged in off-highway
recreational use.
   (b) Any person who exports the motor vehicle fuel for use outside
of this state.  Motor vehicle fuel carried from this state in the
fuel tank of a motor vehicle is not deemed to be exported from this
state unless the motor vehicle fuel becomes subject to tax as an
"import" under the laws of the destination state.
   (c) Any person who sells the motor vehicle fuel to the armed
forces of the United States for use in ships or aircraft or for use
outside this state, under circumstances that would have entitled him
or her to an exemption from the payment of the license tax under
Section 7401 had he or she been the distributor of this fuel.
   (d) Any person who buys and uses the motor vehicle fuel in any
construction equipment which is exempt from vehicle registration
pursuant to the Vehicle Code, while operated within the confines and
limits of a construction project.
   (e) Any distributor who sells motor vehicle fuel which is sold to
any consulate officer or consulate employee under circumstances which
would have entitled the distributor to an exemption under paragraph
(6) of subdivision (a) of Section 7401 if the distributor had sold
the motor vehicle fuel directly to the consulate officer or consulate
employee.
   (f) Any distributor who is licensed under Section 7451 and is
authorized by the board to acquire exempt motor vehicle fuel pursuant
to paragraph (3) of subdivision (a) of Section 7401, who acquires
the motor vehicle fuel from a distributor who is not authorized by
the board to acquire exempt motor vehicle fuel pursuant to paragraph
(3) of subdivision (a) of Section 7401.
  SEC. 9.  Section 8106.7 is added to the Revenue and Taxation Code,
to read:
   8106.7.  In lieu of the collection and refund of the tax on motor
vehicle fuel purchased by a licensed distributor who is entitled to
claim a refund of tax under subdivision (f) of Section 8101, credit
may be given the distributor upon his or her tax return and the
determination of the amount of his or her tax in accordance with
those rules and regulations as the board may prescribe.
  SEC. 10.  Section 8127.6 is added to the Revenue and Taxation Code,
to read:
   8127.6.  A distributor who is licensed under Section 7451 and is
authorized by the board to acquire exempt motor vehicle fuel pursuant
to paragraph (3) of subdivision (a) of Section 7401, and who paid
tax reimbursement to a distributor who is not authorized by the board
to acquire exempt motor vehicle fuel pursuant to paragraph (3) of
subdivision (a) of Section 7401, may not seek tax reimbursement from
another distributor who is authorized by the board to acquire exempt
motor vehicle fuel pursuant to paragraph (3) of subdivision (a) of
Section 7401.  However, the distributor may seek a refund, pursuant
to subdivision (f) of Section 8101, of the tax reimbursement it paid
to the distributor who is not authorized by the board to acquire
exempt motor vehicle fuel pursuant to paragraph (3) of subdivision
(a) of Section 7401.
  SEC. 11.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
